Pension, health care utilization and intra-household resource allocation in rural China

Zeyuan Chen, Lund University
Albert Park, Hong Kong University of Science and Technology

This paper investigates whether cash transfer program influences the intra-household resource allocation in rural China. Previous studies show that the relative bargaining power of household members has a great impact on intra-household resource distribution. However, empirical studies have found it difficult to measure the relative bargaining power as many possible indicators are endogenous. We focus on New Rural Social Pension (NRSP), a program that introduced in China between 2009 and 2012. The pension program acted as a new cash transfer program to those above age 60, because they received benefits without having had to make any prior contributions to the program. We observe an exogenous change in the relative bargaining position. A regression discontinuity design is applied to exam the casual effect of the receipt of pension benefits on utilization of health care and medical payments. Health expenditures could be clearly assigned to individuals. Also, it represents an important part of the elderly’s wellbeing. Using data from the China Health and Retirement Longitudinal Study, a nationally representative data set, we find that the receipt of pension benefits increases the utilization of health service and health expenditure. Moreover, females and those elderly do not live with grandchildren benefit more from the pension benefits.